GRAND RAPIDS — Office furniture maker Steelcase Inc. reported a steep drop in first quarter revenue along with a steady decline in orders as the coronavirus pandemic spread globally.
The Grand Rapids-based Steelcase (NYSE: SCS) said it generated $482.8 million in revenue for the first quarter of its 2021 fiscal year, which ended May 29, well off the $824.3 million mark it set a year ago.
The company attributed the 41-percent drop in revenue, which was broad-based across all segments, to the various government mandates, which it claimed was a limiting factor in its ability to manufacture products and fulfill orders throughout the first quarter.
Revenue from the Americas dropped 42 percent in addition to a 38 percent drop in Europe, the Middle East and Africa (EMEA).
Orders also plummeted, starting with a 16 percent decrease in March as the COVID-19 pandemic really took hold, and accelerating a 47 percent drop in April and a 42 decline in May.
For the quarter, Steelcase posted a net loss of $38.1 million, or 33 cents per share, which included a non-cash goodwill impairment charge of $17.6 million “that primarily resulted from the impacts of the pandemic and related economic uncertainty.” A year ago, the company reported net income of $17.8 million, or 15 cents per diluted share.
“The global pandemic dramatically interrupted our momentum from a very strong fiscal 2020,” Steelcase President and CEO Jim Keane said in a statement. “Suddenly, we were closing plants and taking actions to protect employees and preserve capital. Instead of permanent layoffs, we helped temporarily-idled employees access government programs, while paying the full cost of their health care premiums.
“Salaried workers took significant pay cuts, with higher-paid people taking the deepest cuts. As we began to ramp up manufacturing of essential business orders, we were able to ease the pay reductions and call back our hourly production employees. Because we were able to increase production sooner and faster than we expected, our revenue for the quarter was slightly better than some scenarios we modeled.”
In the current second quarter of Steelcase’s fiscal year, orders have continued to decline, including by 34 percent in the first four weeks of June compared to the prior year.
However, revenues are poised to rebound as Steelcase begins to address its $751 million order backlog, most of which it expects to ship sometime in the second quarter.
As well, Steelcase ended the quarter with $637.5 million in cash on its balance sheet.
“We expect our second quarter revenue and operating results will benefit from the high level of backlog and maintaining our salary reductions and other cost containment efforts, and by the end of the second quarter, we anticipate having positive adjusted operating income for the year to date,” CFO Dave Sylvester said in a statement. “We believe the strength of our liquidity position will provide ballast over the course of the year as we navigate the economic uncertainty.”